DTCC Connection

Building More Integrated Client Solutions is Top of Mind at DTCC

By Mike Scotti

Delivering integrated solutions for the middle- and back-office that reduce costs and risk for clients is top of mind for DTCC’s Tim Keady, Managing Director, DTCC Solutions.

That is what clients are clamoring for, said Keady, who has a keen awareness of their needs as head of DTCC Solutions. A 20-year financial services veteran, Keady oversaw the Sales and Solution Delivery team, which includes Sales and Partners, Relationship Management, Global Solution Delivery, Marketing & Communications and Industry Relations, until October 2016, when he assumed the additional assignment of heading DTCC Solutions.

His responsibilities now include managing DTCC’s businesses in derivatives, collateral, institutional post-trade processing and data products, as well as DTCC’s joint venture company, DTCC-Euroclear Global Collateral Ltd. DTCC Solutions offers complimentary products to DTCC’s Core business of clearing and settling equities and bonds.

By aligning the Solutions business with Sales and Solutions Delivery, DTCC is looking to gain additional synergies by incorporating an “outside-in” client approach to prioritize product development that delivers value and return on investment for clients and DTCC. “We have good relationships with our clients,” Keady said. “If we look at everything through the lens of the client, we’ll be able to create better products and services, while further enhancing the client experience,” he said.

Seamless Integration

Keady has been working with Murray Pozmanter, Managing Director, Head of Clearing Agency Services and Global Operations Client Services, the Solutions business heads and others to identify how products within DTCC’s Core businesses and Solutions can work together seamlessly, for both the buy-side and sell-side. Their charge is to further reduce operational “pain points,” costs and risk for clients. Keady pointed to two new ALERT services introduced last year that are bringing this vision to life.

For example, Automating SSIs Together (ASSIsT) introduces a service for broker-dealers to get Standing Settlement Instructions (SSI) of non-automated buy-side firms on the ALERT platform. Global Custodian Direct (GC Direct) is another program that gives custodians SSI responsibility. The ultimate goal for these products is to centralize SSIs to reduce the number of failed trades, which are costly for the industry.

In addition, increasing the number of collateral SSIs will also be a central part of DTCC-Euroclear Global Collateral Ltd.’s Margin Transit Utility, which plans to move collateral between parties in a straight through processing environment to streamline the processing and settlement of margin. This will make moving collateral more efficient and less costly.

"This is the type of holistic approach to product development and integration that clients want from us,” Keady said. “Our goal is to leverage our unique expertise and understanding of the industry, as well as insights and feedback from clients to bolster our product pipeline. If we are able to do this consistently, our clients will view us as an innovative partner rather than a financial technology vendor. That’s the sweet spot where we want to position the firm.”

Trade State Manager

Keady highlighted Trade State Manager (TSM) as another example that falls under the “integrated solution” banner. TSM, slated to begin as a pilot program in April, is a platform to publish, view and communicate exceptions throughout the trade lifecycle process. TSM gives broker-dealers, buy-side firms and custodian banks a unified and centralized view into their exceptions in near real-time – plus communication channels and an audit trail.

Key to TSM’s design is its goal of creating efficiencies between the middle and back office that reduces costs for the industry. TSM will also have an ancillary benefit in helping clients in the U.S. to meet their T+2 settlement obligations, as the product will reduce the time it takes to remedy fails and the associated expense. “With the cost pressures that all firms are facing, it will be critical for everyone to continue to automate their middle- and back-office processing,” Keady said.

Although clearing is a Core function within DTCC’s SIFMU businesses, Keady pointed out that TSM was created across business lines in the company’s quest to deliver integrated products. Central to its design are a number of products that come under DTCC Solutions’ umbrella— Omgeo Central Trade Manager, OASYS, TradeSuite ID and ALERT.

Blueprints for the Future

TSM, ASSIsT and GC Direct offer a blueprint on how to bring new products and services to market. Besides the benefit they provide as integrated solutions, all took less than a year from inception to launch. “Clients don’t have the appetite for long-term projects of two or three years,” Keady explained. “They need to reduce costs right now, and the solution that’s first in the marketplace will have a better chance for adoption and long-term success. We already have deep experience in solving operational challenges for the industry – and now we’re demonstrating that we’re capable of moving quickly to seize an opportunity while maintaining the high standards that our clients expect from us.”

Keady said he is particularly excited about DTCC’s recently announced plans to use distributed ledger technology (DLT) to re-platform its Trade Information Warehouse (TIW). Calling it “a major breakthrough,” he said this type of innovation burnishes DTCC’s reputation in the industry and differentiates it from competitors. “While some of our competitors were predicting our demise at the hands of blockchain solutions just a year ago, we’ve proven them wrong by becoming a leader in this area,” he explained. TIW is DTCC’s post-trade processing system for credit default swaps. DTCC is building the DLT solution with IBM, along with Axoni and R3.

Keady said the initiative may produce long-term benefits that could positively impact other products beyond the derivatives market. As the project progresses, DTCC and its partners will learn more about other potential applications of DLT in the post-trade process. “This is an exciting time and project to be involved in,” Keady said. “It can be a blueprint for other applications of DLT.”

Delivering Value to Clients

Keady noted the most critical lesson he has learned from his years in senior-level client-facing roles is the importance of listening to customers throughout a product’s lifecycle, from inception to delivery. “That is the only way to make sure we are delivering the right value,” he said. “Product plans and business plans are never stagnant; they are always moving, and firms need to have the ability to adapt as market conditions and client needs evolve.”

In the hundreds of meetings Keady has with clients each year, he said they see integrated solutions and more technology as central to new product development. “Innovation is important to them,” Keady said. But security of their data also remains a top concern. “Clients want to make sure their information is safe and in a secure environment,” he added.

Overall, Keady characterized clients as pleased with what DTCC has been able to accomplish from a product and client service perspective. But he also pointed to the rapid pace of change in business due to technological advancements. Today’s products and services need to evolve and improve – and continually deliver value, because the bar is always being raised. “Clients always expect more from their providers, and we have to be ready to meet that challenge,” Keady said. “I am very confident we have the right team across the firm to grow DTCC’s role in the industry and to make a more meaningful impact on our clients.”